No Easy Way Out for Insolvent Strata Owners
The Owners – Strata Plan No 80877 v Lannock Capital 2 Pty Ltd [2023] NSWSC 1401
GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.
Quick Read
This 2023 NSW Supreme Court decision involved an application by the Mascot Towers strata building to end the strata scheme and wind up its affairs. It comes as a result of the major structural faults in the building that led to evacuation in 2018 and a series of unsuccessful attempts to resolve the causes and consequences of those problems that have left the strata building and owners ‘insolvent’ as they describe it. The case was opposed by the major lender to the strata building. The NSW Supreme Court did not make a termination order because it was not satisfied that the strata title scheme was effectively destroyed, the strata building failed to ensure that creditors would be paid in full, and there was a better option under the collective sale mechanisms available. It’s an important reminder of a few fundamental strata principles about strata building maintenance obligations, strata owner liabilities, and the protection of financial interests in strata buildings.
Implications
The key implications of this strata case are as follows.
A strata scheme can be ended under s 136 of the Strata Schemes Development Act 2015.
Usually, termination needs strata lot owner support, preserving all ongoing property rights [except the lot owners’ titles], and payment of all debts.
Courts can consider a range of issues, including impacts on strata lot owners and others with interests [of all kinds] in the strata building.